As the hundreds of thousands of Australians who take out a new home loan or refinance each year will attest, applying for and getting a loan can often be painful.
New research from digital lender Nano confirms this sentiment, with three out of four Australian owners admit his frustration with the “slow” and tedious mortgage process.
Nano, which is one of the country’s newest lenders to be launched last month, however, is tasked with exposing shortcomings in the “outdated” home loan process. For starters, fintech has launched its own figure of inaction – a manifestation of the parts of the process that owners hate the most.
According to Nano research, confused jargon (72%), the slow process and hidden fees (55%) and excessive paperwork (48%) were among the main inconveniences.
“If you’ve ever had a home loan, you probably know The Inaction Figure and what it stands for. Lenders are stuck in the past, buried in legacy paperwork, technology and processes, ”says Andrew Walker, co-founder and CEO of Nano.
“There hasn’t been any innovation in decades, which means the industry relies on old technology, old products, old processes and, at the end of the day, that means the customer does still the heavy lifting. “
“You’re not going to ask someone on the street what the current mortgage process looks like and then get a double boost in return.”
The fastest home loan in the world?
In recent months, the volume of new home loans taken by Australian buyers has increased, with $ 32.6 billion in new loans recorded by ABS in May alone – the highest amount on record.
While this has been a boon to lenders, the large number of loan applications that are pouring in has also put pressure on the application and approval processes. As a result, many reports point to slower processing times.
So how long does the process tend to take? According to Nano research, one in two Australians said it took up to four weeks for their home loan to be approved, while another in five said it took up to two months.
Enter Nano. While fintech isn’t the first Australian lender to accept long-term mortgage applications and approvals, its all-digital process aims to dramatically reduce these delays.
“We have designed a transparent home loan application and approval process. We know, for example, that this is a world first – it’s the fastest mortgage approval process in the world, of which we are very proud, ”said Walker.
“So far, the fastest loan application with unconditional approval – meaning the end of the application, the credit assessment and the identification process – has been 9 minutes and 41 seconds.”
Walker says the speed and ease of the process ends up being beneficial to both Nano and its mortgage applicants.
“This benefits us because the shorter the process and the more automation you have, the lower the operating costs, which allows us to offer lower prices to our customers. We also don’t expect clients to do the heavy lifting – we believe it should be a process that isn’t long, opaque and confusing, or where they have to do all the work.
Fighting the inertia of refinancing
As part of its final mortgage loan price request A report released in December 2020, ACCC urged Australian mortgage holders with older home loans to reevaluate their rates given the significant amount of money they could save by doing so.
Despite this appeal, and even with mortgage rates currently at some of their lowest levels on record, only a small percentage of homeowners regularly switch mortgages. A recent analysis of Mozo’s figures found that around 470,000 mortgages had been refinanced in the 12 months leading up to March 2021, which equates to around 8% of total mortgages in Australia. ^^
But what is behind this “inertia of the mortgage loan”?
Walker thinks it boils down to three main areas: awareness customers have about their existing rates and charges compared to other offers, the monetary value benefit to they will receive by switching and the effort they will be faced with making the trip.
“We think we’ve solved all of these things,” he says. “We are completely transparent, our savings are large enough that people can see the benefits of the change, and with our application and approval process which can take as little as 10-20 minutes, the effort people need. do is kept. at least.
With variable interest rates ranging from 1.99% (1.99% comparison rate *) for owner-occupiers and 2.29% (2.29% comparison rate *) for investors, Nano’s variable home loan rates are among the lowest in the Mozo database at 75% value report level (LVR).
The homeowner rate is also significantly 121 basis points lower than the Mozo database average variable rate of 3.20% for homeowner loans with a maximum LVR of 75%.
To put this difference into perspective, a homeowner who was able to refinance their existing $ 400,000 home loan balance from a rate of 3.20% to 1.99% would reduce their monthly repayments by $ 237 and save 56,883. $ in total interest over a period of 20 years.
Currently, Nano home loans are only open to homeowners and investor refinancers, but Walker says they will be available for new purchases later in the year.
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To learn more about Nano’s mortgage offering, including all of the features and rates involved, read our Variable Home Loan review.
If not, see how it stacks up against some of the great deals for refinancers in the table below, or head over to the Mozo Refinance Home Loan Comparison Center to compare even more deals from a wider range. of lenders.
^^ Refinancing figures from ABS loan indicators from January 2021 and mortgage figures from the APRA report on loan deferrals from February 2021.
^ See information on the Mozo Experts Choice Home Loan Awards
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